The Supreme Court has restored a Delhi High Court Single Judge’s order awarding liquidated damages of over ₹27 crore against M/s Saisudhir Energy Ltd (SEL) for delay in commissioning a solar power project under the Jawaharlal Nehru National Solar Mission, holding that the High Court Division Bench exceeded its appellate jurisdiction by reworking the compensation.
The dispute arose from a 2012 power purchase agreement between Saisudhir Energy and NTPC Vidyut Vyapar Nigam Ltd (NVVNL) under which the developer was required to commission a 20 MW solar project by February 2013. The project was commissioned in phases with delays ranging from two to five months, triggering the liquidated damages clause in the agreement.
An arbitral tribunal, by majority, awarded ₹1.2 crore as damages, while a minority opinion upheld full contractual damages. On challenge, a Single Judge of the Delhi High Court modified the award and granted 50% of the contractual damages, amounting to approximately ₹27 crore. However, the Division Bench reduced this figure to ₹20.70 crore.
The Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar has held that the Delhi High Court Division Bench exceeded its jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996 by reworking and recalculating the amount of compensation payable in an arbitration dispute.
The Court observed that once the Single Judge, exercising powers under Section 34, had determined reasonable compensation by applying Clause 4.6 of the power purchase agreement and awarding 50% of the stipulated amount, appellate interference was unwarranted in the absence of perversity, arbitrariness, or deviation from contractual terms.
Criticising the Division Bench, the Supreme Court held that its reduction of damages amounted to a mere substitution of its own view for a plausible view already taken by the Single Judge, an exercise impermissible under Section 37. Reiterating that appellate courts must only examine whether the Section 34 court acted within its jurisdiction, the Court set aside the Division Bench’s judgment and restored the Single Judge’s order.
As a result, the appeals filed by NVVNP were allowed, those filed by SEL were dismissed.
Appearances
Petitioner- Mr. Gopal Jain, Sr. Adv. Mr. Adarsh Tripathi, AOR Mr. Vikarm Singh Baid, Adv. Mr. Ajitesh Garg, Adv. Mr. Gowtham Polanki, Adv. Mr. Sahil Raveen, AOR
Respondent- Mr. Gowtham Polanki, Adv. Mr. Sahil Raveen, AOR Mr. Gopal Jain, Sr. Adv. Mr. Adarsh Tripathi, AOR Mr. Vikram Singh Baid, Adv. Mr. Ajitesh Garg, Adv.
